Method and system for managing and conducting a network auction

ABSTRACT

There is described a method and system for managing Internet auction transactions by creating an auction website by, for example, a financial institution. The auction website is accessible by the financial institution&#39;s account holders (e.g., holders of checking, savings, credit card, and investment accounts). Thus, all buyers and sellers in auction transactions on the auction site, for example, have accounts with the financial institution, with settlements occurring between the accounts of the users at the financial institution. Payments are debited from the buyer&#39;s account(s) with a credit going to the account of the seller, less any fees. All charges occur internally, so no interchange is owed, for example, to a card association in connection with a transaction. Financial institution customers benefit from the system in that buyers and sellers are authenticated and settlement occurs almost instantaneously.

CROSS-REFERENCE TO RELATED APPLICATIONS

This application is a continuation of, claims priority to, andincorporates by reference in its entirety, U.S. patent application Ser.No. 09/610,540, entitled “METHOD AND SYSTEM FOR MANAGING AND CONDUCTINGA NETWORK AUCTION,” filed Jul. 7, 2000 which claims priority to andincorporates by reference in its entirety, U.S. Provisional PatentApplication No. 60/143,021, filed Jul. 9, 1999.

BACKGROUND OF THE INVENTION

1. Field of the Invention

The present invention relates generally to the field of electroniccommerce and more particularly to a method and system for managingperson-to-person payment transactions, including auction transactions,over a network, such as the Internet.

2. Description of the Related Art

Currently, person-to-person payment transactions are conventionallyperformed using, for example, cash, personal checks, a money order orthe like. Using any one of these traditional payment methods at leastone party to the transaction assumes certain risks. For example, in thecase of a goods for cash transaction, the buyer is handing over cash fora good or goods which may not conform as promised by the seller tohis/her expectations. In the case of a seller who accepts a check from abuyer, the seller is taking a chance that the check will clear. Theseller may be able to decrease his/her chance of loss, by holding ontothe good(s) until the check clears, but this then causes a delay to thebuyer who must wait for the check to clear prior to receiving his/herpaid for good(s). These are but a few examples of the risks that areassumed in the performance and settlement of person-to-person paymenttransactions. In addition, there is a need for consumers to be able tofacilitate person-to-person payments, for example, to facilitatebirthday presents or reimbursement of funds that were spent without amerchant being involved that eliminates the necessity for consumers touse paper checks or cash as the payment vehicle between two individualparties.

A specific application of person-to-person payment transactions, is toInternet auction transactions. In the performance of these auctiontransactions, a buyer does not really know if the purported selleractually exists, and neither does a seller in such an auction knowwhether the purported buyer actually exists. Therefore, a buyer whoenters the winning bid takes a chance on the existence of the purportedseller, as well as whether he or she will ever get the merchandise onwhich the bid was entered. Likewise, a seller who accepts the winningbid takes a chance on the existence of the buyer who purported to enterthe winning bid. Further, since payments for an on-line auction purchaseare actually being made person-to-person via check or money order, ittakes an inordinate amount of time to clear checks through the currentAutomated Clearing House (ACH) systems, which slows down the purchasingprocess considerably via the on-line auction context.

Typically, in such an auction, a user at a terminal, such as the user'spersonal computer (PC) accesses an auction page on the Internet, such asE-BAY and goes through a registration process. Registering basicallymeans that the user at the user's PC enters the user's address, such asan e-mail address, and an e-mail is sent to the user, for example, atthe user's PC, which tells the user that he or she is allowed to bid.The user is also given, for example, a bidding name, and the user setsup a password on the system.

It is well known that anyone, can set up an Internet account for ane-mail address with a service provider, such as AOL or the like, and itis possible for a party to secure an e-mail address while concealing hisor her true identity. It is also possible for someone to use anotherparty's e-mail address on an unauthorized basis, and e-mail addressesare commonly stolen and used without the owner's authorization. Inshort, there are no guarantees associated with an e-mail address as toany identifying characteristics (e.g., age, gender, status) of the userof the e-mail address.

When the user registers on the auction page with the user's e-mailaddress and receives a bidding name, the user is ready to bid or listwith the auction site. In the case of auction sites as with auctionhouses, at least one of the seller and buyer pays a fee for theopportunity to use the auction site. Usually the seller pays for theability to list and sometimes pays an additional fee in the form of apercentage of the eventual selling price. The procedure varies for someauction houses, such as SOTHEBY'S, in which the buyer pays the fees.However, as a general rule, it is the seller who pays the fees, and theauction house generally bills or invoices the seller once a month. Uponreceipt of the invoice, the seller generally pays, for example, bywriting a check, although sometimes sellers can pay by credit card Inthe case of Internet auction sites, most people selling at auction overthe Internet are not what we typically think of as merchants. Rather,they are simply individuals, and when they sell something, they are notusually equipped to receive payment by any means (e.g., credit card)other than by check, money order, or the like. This causesinconveniences for both parties, since the buyer must actually write acheck or obtain a money order and then the buyer must wait until theseller is satisfied that the check will clear, etc., before the good(s)are transferred.

Internet auctions include, for example, normal auctions in which peopleenter bids and the bid price goes up as people bid higher and higher, aswell as what are called Dutch auctions. In a Dutch auction, the processbegins at a certain price, and the price goes down until somebody makesan offer at the current price. In a Dutch auction, effectively, someonewins the bid, because there are time frames. In other words, the bidsare scheduled to end at a certain time, so they do not go continuously.In any event, when the bidding ends, the seller notifies the buyer viae-mail that the buyer has won the bid and asks the buyer to send theseller payment, such as a check or a money order, for the purchase priceplus, for example, a certain amount for shipping and handling.

Upon receipt of such e-mail, it is up to the buyer to either write apersonal check and/or get a certified check or a money order, whichmeans a trip to the Post Office or the financial institution, and sendthe check or money order, for example to an address for the seller givenin the e-mail. It is readily apparent that when the buyer sends thecheck or money order to the seller, the buyer takes a substantial riskthat the seller actually exists and/or that the buyer will actuallyreceive the good(s) for which the buyer has paid. The buyer expects theseller to package and ship the good(s) to the buyer when the sellerreceives a money order or a certified check. However, if the buyer paysby personal check, the seller typically waits several weeks for thecheck to clear before packaging and shipping the good(s). While oneauction house has recently started a voluntary verification process inwhich users can have themselves “verified” by paying a fee and sendinginformation to a credit bureau, the process is voluntary and does nottake place on both sides of a transaction.

Accordingly, there is currently a tremendous amount of uncertainty inInternet auction transactions, for example, as to whether buyers orsellers really exist. There is likewise also considerable uncertainty asto whether or not buyers will pay, and if they do pay, whether thepayment funds are good. Further, if the funds are good, there is atremendous amount of uncertainty about whether the buyer will actuallyget the merchandise for which the funds were paid. The risk is aseller's risk, as well as a buyer's risk. The buyer risks not receivingthe merchandise for which the buyer paid. The seller's risk lies, forexample, in putting the seller's merchandise up for auction andreceiving a winning bid, and waiting a month or more to discover thatthe buyer does not exist or sent bad funds for payment.

SUMMARY OF THE INVENTION

Settlement of an Internet auction transaction occurs through the systemof the financial institution that is sponsoring the auction website. Itis not necessary, for example, for a credit card settlement to gothrough a card association. Rather, it is simply a matter of running thesettlement through the financial institution's system and, in effect,the buyer buys something, for example, for ten dollars, so the financialinstitution takes ten dollars from or charges the buyer's account tendollars, and the seller sells something, for example, for ten dollars,so the financial institution gives the seller a credit on the seller'saccount for ten dollars. Thus, the settlement is very much like havingthe buyer and seller present together and exchanging the fundsinstantaneously. The settlement is reported as a transaction on theaccount statements of both customers.

It is a feature and advantage of the present invention to provide amethod and system for managing auction transactions over the Internetwhich removes the risk of non-authentic buyers and sellers byauthenticating the buyer and seller in a transaction from the buyer'sand seller's account information, respectively.

It is a further feature and advantage of the present invention toprovide a method and system for managing Internet auction transactionswhich avoids the risk of non-payment and delayed shipment of good(s) bysettling the transaction on accounts of the buyer and seller in thetransaction.

To achieve the stated and other features, advantages and objects, anembodiment of the present invention provides a method and system formanaging Internet auction transactions by creating an auction websiteby, for example, a financial institution. The auction website isaccessible by the financial institution's account holders (e.g., holdersof checking, savings, credit card, and investment accounts). Thus, allbuyers and sellers in auction transactions on the auction site, forexample, have accounts with the financial institution, with settlementsoccurring between the accounts of the users at the financialinstitution. Payments are debited from the buyer's account(s) with acredit going to the account of the seller, less any fees. All chargesoccur internally, so no interchange is owed, for example, to a cardassociation in connection with the transaction. Financial institutioncustomers benefit from the system in that buyers and sellers areauthenticated and settlement occurs virtually instantaneously.

Additional objects, advantages and novel features of the invention willbe set forth in part in the description which follows, and in part willbecome more apparent to those skilled in the art upon examination of thefollowing, or may be learned by practice of the invention.

BRIEF DESCRIPTION OF THE FIGURES

In the drawings:

FIG. 1 is a schematic of the parties to an auction transaction accordingto an embodiment of the present invention;

FIG. 2 is a registration process according to an embodiment of thepresent invention;

FIG. 3 is a registration process according to an embodiment of thepresent invention;

FIG. 4 is an auction payment process according to an embodiment of thepresent invention;

FIG. 5 is an auction payment process according to an embodiment of thepresent invention;

FIG. 6 is an auction payment process according to an embodiment of thepresent invention; and

FIG. 7 is an auction payment process according to an embodiment of thepresent invention.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS

Referring to FIG. 1 an embodiment of the present invention enablesauthentication of counterparties to an Internet auction transactionwherein both parties hold financial accounts with the provider of theauction website. An Internet auction transaction for an embodiment ofthe present invention involves, for example, a seller 10 at the seller'sPC 12 and a buyer 14 at the buyer's PC 16, each accessing the auctionpage of the website server 18, for example, of a financial institution,over the Internet 20 or any other public or private network.

In an embodiment of the present invention, the seller is known to thefinancial institution as the holder of an account with the financialinstitution, and the buyer is likewise known to the financialinstitution as the holder of an account with the financial institution.Thus, there is a known financial institution account holder on both endsof the Internet auction transaction. The financial institution knowsthat both the seller and the buyer actually exist. When the transactionoccurs, the payment is very simple, because the payment is made by thefinancial institution debiting the account of the buyer who bought theitem at auction and crediting the account of the seller who sold itthrough an internal settlement system 22. Therefore, it is known thatthe parties are dealing with actual people, or at the very least, activeaccounts and that once the transaction occurs, the seller will receivehis or her funds. In a first preferred embodiment of the presentinvention, the funds transfer is virtually instantaneous, allowing theseller to have the benefit of the payment almost immediately. While in asecond preferred embodiment of the present invention, the funds are heldin escrow until the good(s) are received by the buyer, as discussedbelow.

Referring to FIG. 2, in an embodiment of the present invention, aprocess for participating in the Internet auction website of the currentinvention begins with the potential seller and the potential buyer eachregistering with the financial institution's auction website S2, S12 byproviding at least an e-mail address and payment account information. Inprompting the seller and buyer for payment account information, thefinancial institution queries whether or not the seller or buyer holdsan account with the financial institution S4, S14. When a seller orbuyer asserts that they have an account with the financial institution,the financial institution then verifies that the seller and buyer are infact financial institution account holders, that the account numbers foreach are valid, and that each is in good standing S6, S16. If theselected account is not found or is not in good standing, registrationis denied under that selected account S8, S18. This may be accomplishedby, for example, an application on the website server which accessesfinancial institution account data stored, for example, in a financialinstitution database. In the verification process, the financialinstitution confirms, for example, that the credit cards are not stolen,that the cards are good, that the credit card accounts are paid on timeor that the selected accounts (e.g., checking, savings, brokerage) arein good standing. In other words, the financial institution confirmsthat the accounts are active and in good standing for purposes offinancial transacting.

In an alternate embodiment, the buyer or seller may be prompted toselect an alternate account under which to register. In this case, thesystem will again check the viability of the selected account prior toallowing registration. Though the verification is done over theInternet, a public network, account numbers are sent securely using, forexample, encryption. Data transmission encryption techniques are wellknown in the Internet art and will not be discussed further within thisapplication.

Once an active account is selected, the website issues the buyer orseller a registration ID S10, S20. This ID may take many forms,including a username/password combination selected by the buyer andseller or it may be an alphanumeric code/personal identification number(PIN) assigned randomly by the financial institution, wherein thefinancial institution associates the selected user/password combinationor the assigned code with the buyer or seller's selected account number.

Once issued a registration ID, the seller and buyer may gain access tothe auction portion of the website and sell or bid on good(s). A sellerlists good(s) on the website under his/her registration ID S22.Similarly, a buyer bids on listed good(s) using his/her registration IDS24. Eventually, a buyer will win the bidding for a listed good(s) S26.In the embodiment described above, both the buyer and seller holdaccounts with the financial institution running the auction website.This need not necessarily be the case.

Referring to FIG. 3, non-account holders may also participate in theauction website if they hold credit cards from member associations orhave other approved accounts with member financial institutions. Memberassociations and member financial institutions are pre-approved by theauction sponsoring financial institution. Similar to the registrationprocess for the account holders, non-account holder sellers and buyersare prompted for payment account information and the financialinstitution queries whether or not the seller or buyer holds an accountwith a member association or member financial institution S30, S40. Ifno such account is held, then the buyer or seller is denied registrationS32, S42. When a seller or buyer asserts that they have such an accountwith a member association or member financial institution, thesponsoring financial institution then verifies that the seller and buyerare in fact account holders with the member association or memberfinancial institution, that the account numbers for each are valid, andthat each is in good standing S34, S44. If the selected account is notfound or is not in good standing, registration is denied under theselected account S36, S46.

Once an active account is selected, the website issues the buyer orseller a registration ID S38, S48 wherein the sponsoring financialinstitution associates the assigned code with the buyer's or seller'sselected account number held through a member association or memberfinancial institution. When in possession of a registration ID, theseller and buyer may access the auction portion of the website and sellor bid on good(s). A seller lists good(s) on the website under his/herregistration ID S50. Similarly, a buyer bids on listed good(s) usinghis/her registration ID S52. Eventually, a single buyer will win thebidding for a listed good(s) S56 assuming the bid requirements, if any,set by the seller are met (e.g., minimum acceptable bid is met).

In the following embodiments, the procedure for finalizing the auctiontransaction is the embodiment where both the buyer and the seller haveregistration IDs under accounts of the sponsoring financial institution.These steps are similarly applicable, in most instances, to embodimentswherein either the buyer or seller or both have registered with theInternet auction website using accounts from other than the sponsoringfinancial institution i.e., from a member association or memberfinancial institution. Differences in the process due to non-sponsoringfinancial institution account holders are addressed below.

Once the buyer has won the bidding for a seller's good(s), the auctionsite has a data packet which includes the good(s) associated with theseller's registration ID which is in turn associated with an accountthat the seller used to register with the auction website. Further, thedata packet includes the buyer's registration ID which is in turnassociated with an account that the buyer used to register with theauction website. Finally, the data packet includes the final price bidfor the good(s). At this point, settlement of the transaction may begin.

Referring to FIG. 4, in an embodiment of the present invention, thebuyers and sellers having accounts with the sponsoring financialinstitution are prompted to select which account with the financialinstitution they wish to access for settling the transaction S60, S62.The buyer and seller in this embodiment are not required to settle thetransaction with the same account under which they registered with theauction website. For any number of reasons (e.g., amount of funds, newlyopened account), the buyer or seller may wish to debit or credit anaccount separate from the registering account. In the specificembodiment of FIG. 4, once both the buyer and seller have selected theirrespective accounts/bills, there are at least two payment scenarios, thefirst is an immediate transferal of the payment from buyer to seller,the second is a transferal of the payment into an escrow account whereinthe money is only transferred to the seller upon the occurrence ofcertain events (e.g., buyer communicates receipt of good(s) to thefinancial institution). The methods and systems of the embodiments ofthe current invention may utilize one or both of these paymentscenarios.

In a first particular embodiment of FIG. 4, selecting an exemplaryamount for illustration purposes, if the final bid price is less than orequal to $500, the first, immediate payment scenario occurs. If thefinal bid price is greater than $500, the second escrow payment scenariois instituted. Consequently, after the buyer and seller select theirrespective accounts S60, S62, the system internally queries the bidprice and compares it to the pre-determined threshold of $500 S64. Ifthe final bid price is less than or equal to $500 than the buyer'sselected account is immediately debited and the seller's selectedaccount is immediately credited S66. Both parties are notifiedimmediately via, for example, e-mail, that this transaction has beencompleted S68. The parties will also see the transaction on theirmonthly statements or on-line if the financial institution offerson-line interim statements for the selected accounts.

Following the method to FIG. 5, once the financial portion of thetransaction has been completed for a bid price less than or equal to$500, a first time period is set for the seller to deliver the purchasedgood(s) to the buyer S80. The system queries whether or not the sellerhas delivered the good(s) within the first time period S82 (e.g., buyernotifies of receipt or lack of receipt). If the seller has not deliveredthe good(s) within the first time period, the financial institutionperforms a charge-back or similar transaction, wherein the bid price istaken back from the seller's selected account and credited to thebuyer's selected account S84. This type of transaction is well known inthe financial arts. The auction system may be structured such that thefinancial institution may charge-back the payment from an alternateaccount of the seller should the selected account not having therequired funds.

Alternately, if the buyer has received the good(s) within the first timeperiod, a second time period may be set for the buyer to inspect thegood(s) to determine if they are conforming S86. The system querieswhether or not the buyer responds within the second time period S88. Ifthere is no response, then the transaction is considered to be completeS90. If the buyer does respond within the second time period regardingthe good(s), the system queries whether or not the good(s) are inacceptable condition S92. If the good(s) are acceptable, the transactionis complete S94. If the good(s) are not acceptable, the auction systemof the current embodiment offers the buyer one of two choice forcompletion of the transaction. The buyer may return the good(s) to theseller or the buyer may request a bargaining session with the seller viathe auction system S96.

If the buyer chooses to return the good(s), a third time period is setfor the buyer to return the good(s) to the seller S98. The systemqueries whether or not the good(s) have been returned within the thirdtime period S100. If the good(s) are not returned within the third timeperiod, the transaction is considered to be complete, since the paymenthas been made to the seller and the buyer presumably has the good(s)S102. If the good(s) are returned to the seller within the third timeperiod, a fourth time period is set for the seller to inspect thereturned good(s) to make sure they are in the original condition S104.The transaction is considered complete if the financial institution doesnot hear from the seller in the fourth time period or the sellernotifies the financial institution that the good(s) are acceptable S106.Alternately, if the seller notifies the financial institution within thefourth time period that the good(s) are not acceptable S108, thefinancial institution may refer the seller to legal services to considerthe sellers options at his point S109. As a service to the client, thefinancial institution may offer to reimburse the seller for thenonconformance, up to a set amount. The financial institution may alsooffer insurance for this sort of occurrence at a reasonable price as anoption during the registration process.

Alternately, the buyer may elect to request a bargaining session withthe seller due to the fact, for example, that although the good(s) arenot in conformance, the buyer wishes to keep the good(s) but at areduced price S110. In this case, a message is sent from the financialinstitution to the seller, notifying the seller that the good(s) werenon-conforming, but that the buyer would like to request a bargainingsession with the seller to further discuss the price. At this time, theseller may choose to engage in the bargaining session or the seller mayrequest that the good(s) be returned S112. If the seller does not wishto engage in the bargaining session, the buyer may choose to keep thegood(s) in which case the transaction is complete or the buyer mayreturn the good(s) to the seller, in which case the steps S98-S109 areapplicable.

Assuming the seller agrees to the bargaining session, referring to FIG.7, the buyer is notified of the sellers agreement to participate in abargaining session and a time period is set within which a new pricemust be agreed upon or the good(s) must be returned to the seller inorder to qualify for a charge-back S150. The Internet auction websiteprovides a page for “BARGAINING SESSIONS,” wherein the buyer and sellerenter their respective registration IDs into the ID box and they arelinked to a page containing the details of their original transactionS152. Additionally, a space is provided for a recitation as to thestatus of the good(s) as received and the reason for the request tolower the initially agreed upon price, as well as a new suggestedpayment price S154. This bargaining session may be limited to x numberof messages between buyer and seller, or there may be an unlimitednumber of messages allowed between the buyer and seller. If the buyerand seller agree on a new price for the good(s), a page is provided tothe buyer and seller for submitting the newly agreed upon price S156.The financial institution must receive the same price quote from boththe buyer and the seller before, in this particular embodiment, acharge-back is performed, debiting the seller's account for thedifference between the original bid price and the newly agreed uponprice, and crediting the buyer's account for the difference S168. In theevent that no new price quote is received from both the buyer and sellerwithin the pre-established time period or the buyer does not inform thefinancial institution that the good(s) have indeed been returned to theseller within the pre-established time period S158, the transaction isconsidered to be complete in this embodiment S160. Assuming the good(s)are returned to the seller S164, presumably after an unsuccessfulbargaining session, steps S104-S109 are followed.

In a second particular embodiment of FIG. 4, in the case where the finalbid price exceeds $500, the system in this embodiment does notautomatically transfer funds from a buyers account to a sellers account.In this embodiment, the buyer has a chance to inspect and accept thegood(s) before the seller is credited from the buyer's account oraccounts. The bid amount is deducted from the buyer's selected accountand entered into an escrow account S70. This escrow account may take onvarious forms, but should be managed such that if the good(s) fail tomeet the necessary requirements, the buyer is at the very leastreimbursed for the original amount debited from his/her account. Thereare other management scenarios for the financial institutions escrowaccount, such as where the buyer actually receives interest back on theprinciple, in addition to the principle, in the case of non-conforminggood(s) from the seller. This escrow account may take on various forms,but should be managed such that if the good(s) fail to meet thenecessary requirements, the buyer is at the very least reimbursed forthe original amount debited from his/her account. There are othermanagement scenarios for the financial institution's escrow account,such as where the buyer actually receives interest back on theprinciple, in addition to the principle, in the case of non-conforminggood(s) from the seller. This escrow system may be a requirement of thefinancial institution's Internet auction system, it may be instituted ona transaction by transaction basis (e.g., all transactions over apre-defined price as in FIG. 4), or it may be instituted at the requestof either the buyer or seller as a prerequisite to engaging in businesswith a particular buyer or seller.

Once the buyer's account or accounts have been debited for the auctionedamount and deposited into the escrow account S70, the buyer and sellerare notified of this transaction by the financial institution and theseller transfers the purchased good(s) to the buyer through anappropriate medium S72. This notification may be through any suitablemeans, such as e-mail, telephone, or mail, to name a few examples. Afternotification, the financial institution may start a time period forcompletion of the transaction (e.g., 5, 10, 15 days). If the seller doesnot deliver the good(s) within the first time period S74, the buyer'spayment is returned to the buyer's account S76. Alternatively, referringto FIG. 6, if the buyer has received the good(s) within the first timeperiod, a second time period may be set for the buyer to inspect thegood(s) to determine if they are conforming S120. The system querieswhether or not the buyer responds within the second time period S122. Ifthere is no response, then the seller is credited with the buyer'spayment from the escrow account S124. If the buyer does respond withinthe second time period regarding the good(s), the system queries whetheror not the good(s) are in acceptable condition S126. If the good(s) areacceptable, then the seller is credited with the buyer's payment fromthe escrow account S128. If the good(s) are not acceptable, the auctionsystem of the current embodiment offers the buyer one of two choice forcompletion of the transaction. The buyer may return the good(s) to theseller or the buyer may request a bargaining session with the seller viathe auction system S130.

If the buyer chooses to return the good(s), a third time period is setfor the buyer to return the good(s) to the seller S132. The systemqueries whether or not the good(s) have been returned within the thirdtime period S134. If the good(s) are not returned within the third timeperiod, then the seller is credited with the buyer's payment from theescrow account since the buyer presumably has the good(s) S136. If thegood(s) are returned to the seller within the third time period, afourth time period is set for the seller to inspect the returned good(s)to make sure they are in the original condition S138. The seller iscredited with the buyer's payment from the escrow account if thefinancial institution does not hear from the seller in the fourth timeperiod or the seller notifies the financial institution that the good(s)are acceptable S140. Alternately, if the seller notifies the financialinstitution within the fourth time period that the good(s) are notacceptable S142, the financial institution may refer the seller to legalservices to consider the sellers options at his point S143. As a serviceto the client, the financial institution may offer to reimburse theseller for the nonconformance, up to a set amount. The financialinstitution may also offer insurance for this sort of occurrence at areasonable price as an option during the registration process.

Alternately, the buyer may elect to request a bargaining session withthe seller due to the fact, for example, that although the good(s) arenot in conformance, the buyer wishes to keep the good(s) but at areduced price S144. In this case, a message is sent from the financialinstitution to the seller, notifying the seller that the good(s) werenon-conforming, but that the buyer would like to request a bargainingsession with the seller to further discuss the price. At this time, theseller may choose to engage in the bargaining session or the seller mayrequest that the good(s) be returned S146. If the seller does not wishto engage in the bargaining session, the buyer may choose to keep thegood(s) in which case the seller is credited with the buyer's paymentfrom the escrow account or the buyer may return the good(s) to theseller, in which case the steps S132-S143 may be applicable.

Assuming the seller agrees to the bargaining session, referring to FIG.7, the buyer is notified of the sellers agreement to participate in abargaining session and a time period is set within which a new pricemust be agreed upon or the good(s) must be returned to the seller inorder to qualify for a charge-back S150. The Internet auction websiteprovides a page for “BARGAINING SESSIONS,” wherein the buyer and sellerenter their respective registration IDs into the ID box and they arelinked to a page containing the details of their original transactionS152. Additionally, a space is provided for a recitation as to thestatus of the good(s) as received and the reason for the request tolower the initially agreed upon price, as well as a new suggestedpayment price S154. This bargaining session may be limited to x numberof messages between buyer and seller, or there may be an unlimitednumber of messages allowed between the buyer and seller. If the buyerand seller agree on a new price for the good(s), a page is provided tothe buyer and seller for submitting the newly agreed upon price S156.The financial institution must receive the same price quote from boththe buyer and the seller before, in this particular embodiment, theseller's account is credited with the new price from the escrow accountand the buyer's account is credited from the escrow account for thedifference S170. In the event that no new price quote is received fromboth the buyer and seller within the pre-established time period or thebuyer does not inform the financial institution that the good(s) haveindeed been returned to the seller within the pre-established timeperiod S158, the seller's account is credited with the original amountfrom escrow in this embodiment S162. Assuming the good(s) are returnedto the seller S166, presumably after an unsuccessful bargaining session,steps S138-S143, respectively, may be followed.

A further advantage of the preferred embodiment is the ability of theseller to apply the payment from the buyer to any account or billcurrently available for payment through the financial institution. Forexample, many financial institutions offer services, on-line orotherwise, for automatically paying bills for their customer's from theaccounts of the customer's managed by the financial institution. In apreferred embodiment of the present invention, the seller mayspecifically request that the profit from the on-line auction bedirected to, for example, their mortgage payment, car loan, studentloan, etc. instead of first going to the seller's checking account andthen later being debited therefrom to pay these types of bills.

As discussed with reference to FIG. 3 another aspect of an embodiment ofthe present invention relates to verification in an Internet auctiontransaction for a financial account holder who is not a sponsoringfinancial institution account holder. Such an aspect involves, forexample, an arrangement with the certain credit card associations (e.g.,Visa®, MasterCard®) or non-sponsoring financial institutions (e.g.,Chase, First Union) in connection with authentication of non-sponsoringfinancial institution account holders. Such non-sponsoring financialinstitution account holders are allowed to participate in the auctionsystem in an embodiment of the present invention and are allowed to buyon the system and to use their non-sponsoring financial institutionaccounts to charge the bid price of the good(s). However, non-sponsoringfinancial institution account holders and/or the non-sponsoringfinancial institutions or associations may be charged a fee.

As discussed above, the non-sponsoring financial institutions orassociations may become member associations and member financialinstitutions through arrangements with the sponsoring financialinstitution. Upon becoming a member association or member financialinstitution, account holders with these member associations and/ormember financial institutions may use the auction website, subject tothe registration and verification processes described above.

In an embodiment of the present invention, for a buyer who is an accountholder with a member association and/or member financial institution,the sponsoring financial institution, for example, charges the memberassociation and/or member financial institution account holder for thebid price and issues a check to the seller. Thus, the sponsoringfinancial institution basically guarantees that the buyer is real, andthe sponsoring financial institution looks to the buyer for payment ofthe money charged on the member association and/or member financialinstitution account. In other words, the sponsoring financialinstitution takes the collection risk like it does on any othertransaction.

As part of the verification and settlement proceedings with memberassociations and/or member financial institutions, the sponsoringinstitution may check on the available credit of the member associationaccount holders through conventional credit card authorization lines.Further, the sponsoring institution may, for example, check theavailability of funds through the pre-established ATM lines, prior toallowing sellers and buyers to register with the Internet auctionwebsite. The sponsoring financial institution may also use the ATM linesto check the availability of a buyer's funds at the member financialinstitution, prior to releasing funds to a seller after a bid price hasbeen reached. The sponsoring financial institution would then releasethe funds to the seller and begin external settlement proceedings withthe member financial institution.

A further feature of the Internet auction website is the ability of thesponsoring financial institution to track auction performance historiesof buyers and sellers who utilize the system. These performancehistories include payment and delivery histories of the buyers andsellers as well as purchasing histories of particular buyers and productconformance histories of particular sellers. Using this information, thefinancial institution may provide information on the reputation of aparticular buyer or seller to other prospective buyers and sellers tohelp facilitate use of the system by trustworthy individuals. Further,by tracking the purchasing habits of buyers, the financial institutionmay offer as a service to its buyers, notification that certain types ofgoods have been listed on the auction website. For example, if thefinancial institution establishes through tracking that a particularbuyer frequently purchases antiques, when an antique is listed on theauction website, the financial institution would notify the particularbuyer of this new antique listing. This notification could be in theform of, for example, an e-mail, or even a page depending on thearrangement between the buyer and the financial institution.

Finally, in a similar alternate embodiment, the financial institutionmay offer a service to potential buyers, wherein the potential buyersspecifically request to be alerted when a particular type of good islisted on the website. For example, a potential buyer may be interestedin purchasing a computer. The potential buyer requests that thefinancial institution alert the buyer whenever a computer is listed onthe auction website. The alert may be provided through any availablemedia, i.e., e-mail, pager, etc.

Various preferred embodiments of the invention have been described infulfillment of the various objects of the invention. It should berecognized that these embodiments are merely illustrative of theprinciples of the present invention. Numerous modifications andadaptations thereof will be readily apparent to those skilled in the artwithout departing from the spirit and scope of the present invention.

1. A method for conducting an auction website operated by a sponsoringfinancial institution comprising: registering potential buyers andsellers for the auction website by verifying that the potential buyersand sellers have at least one active account with the sponsoringfinancial institution; upon verification of at least one active account,issuing an individual registration identification to each of thepotential buyers and sellers having at least one active account with thesponsoring financial institution, wherein the individual registrationidentification is associated with the at least one active account;facilitating access to the auction website through a network; listinggoods of registered sellers on the auction website; tracking auctionperformance histories for each buyer and each seller; accepting bidsfrom registered potential buyers for listed goods of registered sellersthrough the auction website; recognizing (i) a final bid amount for atleast one good listed by a registered seller and (ii) a registered buyerwho bids the final bid amount for the at least one good; prompting theregistered buyer of the at least one good to select a buyer's paymentaccount and the registered seller of the at least one good to select aseller's payment account; comparing the final bid amount to apre-determined threshold amount to determine a preferred paymentprocess, wherein the preferred payment process when the final bid amountis above the pre-determined threshold amount includes: debiting thebuyer's selected payment account for the final bid amount; anddepositing the final bid amount into an escrow account; and facilitatingsettlement between the buyer payment account and the seller paymentaccount both held at the sponsoring financial institution, whereinfacilitating settlement between the buyer's payment account and theseller's payment account includes: setting a first time period withinwhich the seller must deliver the good to the buyer; when the sellerdelivers the good to the buyer within the first time period, setting asecond time period within which the buyer inspects the goods todetermine conformance; and when either (i) the buyer acknowledgesconformance of the good within the second time period or (ii) the secondtime period expires with no further contact from the buyer, retrievingthe final bid amount from the escrow account; and crediting the finalbid amount to the seller's payment account.
 2. The method according toclaim 1, wherein the auction performance histories include at leastpayment history, purchasing history, delivery and product conformancehistory.
 3. The method according to claim 2, further comprising:alerting a potential buyer based on the potential buyer's trackedpurchasing history when a good is listed on the auction website that isin line with the potential buyer's tracked purchasing history.
 4. Themethod according to claim 3, wherein alerting the potential buyer isachieved through at least one of the following including e-mail andpager.
 5. The method according to claim 1, wherein the at least oneactive account is a brokerage account.
 6. A method for conducting anauction website operated by a sponsoring financial institutioncomprising: registering potential buyers and sellers for the auctionwebsite by verifying that the potential buyers and sellers have at leastone active account with the sponsoring financial institution; uponverification of at least one active account, issuing an individualregistration identification to each of the potential buyers and sellershaving at least one active account with the sponsoring financialinstitution, wherein the individual registration identification isassociated with the at least one active account; facilitating access tothe auction website through a network; listing goods of registeredsellers on the auction website; tracking auction performance historiesfor each buyer and each seller; accepting bids from registered potentialbuyers for listed goods of registered sellers through the auctionwebsite; recognizing (i) a final bid amount for at least one good listedby a registered seller and (ii) a registered buyer who bids the finalbid amount for the at least one good; prompting the registered buyer ofthe at least one good to select a buyer's payment account and theregistered seller of the at least one good to select a seller's paymentaccount; comparing the final bid amount to a pre-determined thresholdamount to determine a preferred payment process, wherein the preferredpayment process when the final bid amount is below the pre-determinedthreshold amount includes: debiting the buyer's selected payment accountfor the final bid amount and crediting the seller's selected paymentaccount with the final bid amount; and facilitating settlement betweenthe buyer payment account and the seller payment account both held atthe sponsoring financial institution, wherein facilitating settlementbetween the buyer's payment account and the seller's payment accountincludes: setting a first time period within which the seller mustdeliver the good to the buyer; when the buyer does not receive the goodfrom the seller within the first time period, returning the final bidamount to the buyer's payment account and charging the seller's paymentaccount with the final bid amount.
 7. The method according to claim 6,wherein the auction performance histories include at least paymenthistory, purchasing history, delivery and product conformance history.8. The method according to claim 7, further comprising: alerting apotential buyer based on the potential buyer's tracked purchasinghistory when a good is listed on the auction website that is in linewith the potential buyer's tracked purchasing history.
 9. The methodaccording to claim 8, wherein alerting the potential buyer is achievedthrough at least one of the following including e-mail and pager. 10.The method according to claim 6, wherein the at least one active accountis a brokerage account.
 11. A method for conducting auctions over anetwork utilizing an auction website sponsored by a financialinstitution, the method comprising: (a) identifying a populationcomprising at least a seller and at least a potential buyer who areaccount holders of the financial institution; (b) providing each sellerand each potential buyer access to the auction website with each sellerlisting at least one good to be auctioned; (c) conducting an auction toestablish a selling price for the at least one good, a successful buyerand a successful seller; (d) confirming whether a payment account of thesuccessful buyer is in good standing; and (d) upon completion of theauction, debiting the payment account of the successful buyer andcrediting a receiving account of the successful seller.
 12. The methodof claim 11 wherein the payment account is a credit card account. 13.The method of claim 11 wherein the payment account is a checking orsavings account.
 14. The method of claim 11 wherein the buyer or sellermay settle a transaction of the auction with a different account thanwhich was registered with the auction website.
 15. The method of claim14 wherein the financial institution offers insurance for reimbursingthe buyer for nonconformance of the at least one good up to a setamount.
 16. The method of claim 11 wherein the buyer requests abargaining session with the seller to keep nonconforming goods at areduced price.
 17. The method of claim 11 wherein an escrow account isestablished for a purchase of the at least one good and the buyerreceives interest back on a principle of an amount in escrow, inaddition to the principle, where the at least one good is nonconforming.18. The method of claim 11 wherein a payment into the receiving accountof the seller is at least partially applied to a payment account of theseller.
 19. The method of claim 18 wherein the payment account of theseller is a mortgage account.
 20. The method of claim 11 wherein apayment into the receiving account of the seller is at least partiallyapplied to a checking or savings account of the seller.